Tax Questions
Ask your questions about Tax and FBAR here.
This thread will be focused closely on tax questions and answers. If the conversation starts to ramble, those comments will be moved to another thread.
Related threads:
Tax Discussion Thread. Instead of focusing on specific questions and specific cases, broader ideas can be discussed on the Tax Discussion Thread.
Tax Compliance (or not) Discussion Thread
Sub-threads (more will be added as they occurs):
Previous Tax thread:
US Expat Tax and FBAR discussion thread, part 1
US Expat Tax and FBAR discussion thread, part 2
@BC Doc
No cheque would have been sent unless you are receiving Social Security. As far as I know “unsolicited” cheques only went to Social Security recipients.
If you had not filed a 2018 or 2019 tax return, you did not receive the stimulus benefit. Anyone who did not file during these years because they did not meet the income threshold (approximately $12k for a single person) was encouraged to use the “non-filer form” to claim the benefit, otherwise they would not receive the money in a timely fashion. That form closed in November 2020, after the second $600 benefit; anyone who missed out last year can claim all three by filing a 2020 return.
There’s no evidence that the IRS takes citizenship or renunciation into account. Tax return on file – you get the benefit. Social security recipient living abroad – you probably get the benefit.
@BC Doctor
Do you receive any SS monies ,if you do ,there you go. If by any happenstance ,you’d receive the cheque ,what would you with it ?
I am ten+ years shy of collecting my
Social Security for which I am vested so your question is a hypothetical.
I would cash the SS cheque in a heartbeat as I paid into it. I wouldn’t cash the Biden bonus cheque as I don’t live there or file taxes there.
@BC Doc
You won’t receive any stimulus cheques. You would need to have filed a tax return in the past few years for that to happen.
@Ron— Good to know, thank you. The IRS website also seems to say that as I dig deeper. Glad not to receive a stimulus cheque and also happy that cheques aren’t going to an old address.
Regarding social security (not directed specifically to you, Ron), I would encourage folks who paid into it— along with their employers— to collect it as it’s a pension, not free money. If you are vested, meaning you paid in for at least forty quarters, it’s your money. You earned it.
Because of the totalisation treaty between Canada and the US, one doesn’t even need to have paid in for forty quarters to qualify for SS benefits. Time paying into the Canadian system also counts.
The benefit will be less because it is calculated on the amount paid into the US system, but in most cases the individual will also qualify for CPP so it balances out. The treaty also specifies that such government benefits are taxable only by the country of residence.
The US government sends out economic payment to simply justify their citzenship taxation policy and will use their generously sprinkled world-wide cheques as a counter argument to any proposed changes to that policy in the future. Although I would have liked to have framed the cheques, I just simply sent the voided cheques ,with an explanatory note to : Austin Refund Inquiry Unit
3651 S Interregional Hwy 35
Mail Stop 6542 AUSC,
Austin,TX 78741
USA
or to the Austin IRS ,which has the same address and postal code buy without tthe mail stop.
I would consider keeping those cheques ,if one is seriously contemplating renunciation or has already renounced.
@RR
You assume intent or motive on the part of the US government. There is none. Stimulus cheques going out to non-residents, to former citizens, to deceased persons, or to non-citizen Social Security recipients – it’s nothing more than bureaucracy moving in its own mysterious ways.
Keep the money or return it as your conscience dictates, but don’t imagine that this has anything to do US tax policy, past, present or future.
@RH
Perhaps,you are right but do you consider the US sending cheques to all supposed US citzens worldwide
and by the same token considering the same citzens worldwide as tax payers,whether they are or not, a mere coincidence? Also ,bureacracy is more inept than mysterious
The US government is most definitely not sending cheques to “all supposed US citizens worldwide.” They are sending the cheques to citizens, former citizens and never-citizens who meet a variety of criteria – primarily those who filed tax returns in the preceding two years (including departed foreign students who mistakenly used the wrong version of the 1040) or those who receive Social Security.
If you think this is some sort of grandiose plot to send money to current and former US citizens abroad in order to somehow identify them as taxpayers or justify extraterritorial tax policy, then – how can I say this politely? – you have a very vivid imagination.
I wouldn’t necessarily call it ineptitude – that suggests human weakness. It’s more a case of complex organizations and technical systems plus interpretation of potentially ambiguous elements of the legislation.
RH
We are going in circles to no good or useful purpose. Vivid imagination or not ,the legal foundation for the overseas cheques is ultimately CBT and it doesn’t matter to me if those cheques had been sent to cats and dogs in error . No other country is sending cheques and no other country has CBT. Cheers.
@RR
I am not sure the most recent cheques were sent in error or with a nefarious purpose. They were sent to all US social security recipients. I know of two UK ex green card holders who receive US social security, who also received them. I don’t think US citizenship is a factor.
The UK pays a Christmas bonus each year to all their pension recipients wherever they live or whatever their citizenship.
Of course you must do whatever you feel comfortable with.
@Heidi
Here is my take on your remarks. As far as UK christmas bonus to pensioners abroad goes,you and I know that pensions are not a citzenship issue but is a merited payment to a pensioner wherever he or she may live,in most cases.
Also,I would wager that 90-95%,off the top of my head, of the SS pensioners are homeland citzens. And rather than screening ,they may simply be sending cheques to all SS recipicients, for all we know.
Also assuming that the UK has the same 5-10% pensioners living abroad and not receiving these stimulus cheques, the natural question arises as to why the US is so generous and the Brits are not ? I’ve offer an answer.
I am not trying to be impolite but sometimes what seem as clear as day to one may seem as clear as mud to another. At which point one just leaves it be.
@RR
When Congress passed the legislation in a rush and different agencies scrambled to get the money out quickly – including to many millions of people whose income was so low that they did not need to file tax returns – I’m pretty sure that they weren’t going “Mwa-ha-ha, this will lure those expats and accidentals out of the woodwork, if we send them all this money, we’ve caught them, they’ll never escape CBT!” I think they had other priorities.
It’s also evidence that one department does not share info with the other as I never received the stimulus cheque despite being a US citizen, albeit of the accidental variety. My parents, who are not US citizens but receive a small US pension due to working there for 5 years in the 1960s and 70s, both received a cheque! (They returned them!)
@Susan
That’s consistent with what’s been observed. The money went out to Social Security recipients regardless of citizenship, and to anyone who’d filed a tax return for 2018 or 2019 (and who didn’t earn too much). Cheques were *not* sent to every random US citizen, at home and abroad. Of course CBT plays a role here, because non-resident US citizens wouldn’t otherwise be filing, but that’s completely obvious.
I don’t see any nefarious intent here because the vast majority of US homelanders (including those who are members of Congress or work for the IRS) aren’t even aware the US has CBT. All governments are disorganized, folks. The US government, being the largest of all, is the most disorganized of all.
So far ,no one has answered the question as to why the American generosity ? If you say that they are just being magnaniminous, then someone out there truly has a vivid imagination.
Consider also your Canadian neighbor pensioner next door who has received a pittance of help during the pandemic and sees you receive US cheques, is he going to be sympathetic to you and the expat cause .
This also applies to all expats overseas,the common citzen is going to perceive this as favorable treatment US citzens abroad.
Do you not think that issue may arise in the current court case in Canada.
The reason may not seem nefarious but effects may be.
I’ve never written that sending these cheques were conspiratorial. No in any way.That was some one else ‘
idea.For clarity sake, the sending of these cheques and cbt are part of intrinsic American mindset .Links on the same chain.
I will attempt an answer.
Of course the sending of the cheques is related to CBT. This is completely self-evident. Non-resident citizens (and occasionally non-citizens) who filed 2018 or 2019 US tax returns from abroad (and otherwise qualified) received the money; non-resident citizens who did not file US tax returns (and who were not receiving Social Security) did not receive the money.
Why American “generosity”? Because the law was written such that residence status is not relevant to whether one receives the money. This is consistent with CBT, as the US does not particularly distinguish between residents and non-residents as far as tax obligations are concerned. (You may also recall that the first iteration of this payment did not go to anyone filing jointly with an NRA spouse. This was designed to exclude undocumented residents in the US but had the effect of denying the payment to US citizens abroad with MFJ status.)
As a counter-example demonstrating less generosity, are you aware that the new and rather lavish extended child tax credit specifically excludes non-residents? One needs to spend six months of the year in the US in order to qualify. (A similar provision might well have been included for the stimulus benefit if the law had been written in less haste.)
Incidentally, why would a Canadian pensioner need additional help during the pandemic? Presumably they did not lose their job. If their former green-card holding neighbour received $3200 out of the blue because they’d worked a few years south of the border long in the past and drew a small Social Security benefit and the US government was dumb and disorganized enough to send them a stimulus cheque, it’s not up to the Canadian government to match that. And from what we’ve seen from CBC comments, those few who are aware of the “expat cause” are rarely sympathetic, so no great loss.
@RH
”Incidentally, why would a Canadian pensioner need additional help during the pandemic?”
And why would a 15-17 year old living at home and not working need to receive such help?
Not all Canadians make CBC comments and not many Canadians understand the issues involved but just knowing that American expats are receiving side benefits surely doesn’t help in Canadian perception of expats.
It’s nary a blip on anyone’s radar – I wouldn’t worry.
American generosity? Nah, I’d say more like American carelessness, incompetence, or a simple case of unintended consequences.
As for the Canadian pensioner next door, they didn’t need help. Their pension was automatically deposited into their account every month just like before, they didn’t go out much just like before, they didn’t lose their job because they didn’t have one to start with, and they still walked their dog, mowed their lawn, and rode their bicycle around just like before.
(Besides, most folks don’t discuss their personal finances with non-family so most neighbors wouldn’t have a clue whether or not someone received a $3200 windfall.)
I have a bumper sticker on my car that says “Free $3200 from the US Government – Ask me How!”
Not everybody is shy about this. My mail carrier gives me a great big wink every time he brings money from the IRS.
Now that’s funny! But there’s always the possibility that the real reason he’s winking is because he hates expats and thinks he’s delivering a Notice of Assessment.
RH and Maz
Thanks for that laugh guys after a bad week!
My stimulus notification letter came in an envelope which stated “ penalty for private use $300”
Now shall I pay my gardener with it or wipe my backside?